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IMM PE to shortlist buyers for Taihan Electric Wire

By Feb 07, 2021 (Gmt+09:00)

Taihan Electric Wire's cable products
Taihan Electric Wire's cable products

South Korea-based IMM Private Equity is set to announce shortlisted candidates for the sale of Taihan Electric Wire Co. next week. The deal has drawn attention from around 10 global business groups and private equity firms that have joined the race to acquire the country's second-largest electric wire maker.

The company's largest shareholder IMM PE will be exiting five years after its initial investment in 2015. The PE firm plans to sell a 67.54% stake, including stakes held by its special-purpose company and Hana Bank, according to investment banking sources on Feb. 5.

The deal will eventually depend on its price. Last month, the sell-side sold a 6.7% stake in Taihan Electric Wire in the over-the-counter market to attract buyers. The company’s share price, which stood at around 800 won last October, recently surged to around 1,400 won ($1.25). This pushed up the sale price, initially hovering around 700 billion won, to 1 trillion won ($895 million).

It is understood that a foreign wire company has participated in the bid as a strategic investor. But it is unclear if the bid will go through since Taihan Electric Wire’s extra high voltage electric wire technology has been designated as one of the country’s core technologies, requiring government approval for the acquisition.

Meanwhile, domestic power cable maker LS Cable & System, speculated as a strong candidate, did not participate in the bid due to potential antitrust concerns. LS Cable, holding over a 50% share in the electric wire market, would see that rise to 80% share if it were to acquire Taihan Electric Wire, making it unlikely to receive approval from the Korea Fair Trade Commission.

Taihan Electric Wire currently holds around 25% domestic market share. Its profitability has improved significantly, posting 741.3 billion won ($663 million) in revenue and 29.1 billion won in operating profit in the first half of 2020 -- the company's best performance in almost a decade.

In 2015, IMM PE acquired a 71.51% stake in the struggling Taihan Electric Wire for around 300 billion won. Since then, the PE firm has pocketed around 150 billion won in proceeds through four block sales in the company.

After being acquired by IMM PE, the Korean electric wire company successfully stabilized the company by shedding non-core assets and expanding its presence overseas.

The Korean electric wire company has won large turnkey projects in Kuwait, the US, and Australia. Last year, Taihan secured orders for extra-high voltage cable projects in the Netherlands, Singapore, Qatar and the UK.

Recently, IMM PE successfully sold the Korean coffee franchise Holly’s Coffee and is in the process of selling Korea-based online fashion shopping mall W Concept.


Write to Chae-yeon Kim at why29@hankyung.com

Danbee Lee edited this article.

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